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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
ुनवाई की तारीख / Date of hearing: 15.10.2018 घोषणा की तारीख / Date of pronouncement : 29.10.2018 AadoSa / O R D E R महावीर स िंह, न्याययक दस्य / PER MAHAVIR SINGH, JM:
These appeals filed by the assessee are arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in appeal Nos. 1335-THN/13-14 & 10047-THN/16-17 of even date 13.02.2017. The Assessments were framed by the Asst. Commissioner of Income Tax & Dy. commissioner of Income Tax, Circle-4, Mumbai (in short ‘ACIT’ & ‘DCIT’/ AO’) for the A.Ys. 2011-12 & 2013-14 vide order dated 12.02.2014 & 15.03.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The first common issue in these two appeals of assessee is as regards to the order of CIT(A) confirming the action of the AO in disallowing the claim of deduction under section 36(1)(viia) of the Act, in respect of provision for bad and doubtful debts in respect of advances by rural branches in its profit and loss account. For this assessee has raised the following grounds in both the years: - “In for AY 2013-14
On the facts and circumstances of the case, the ld. Comm. (appeals) has erred in not allowing rural branch deduction of ₹ 14,53,19,000/- under section 36(1)(viia).
On the facts and circumstances of the case, the Ld. Comm. (appeals) has erred in denying the rural branch deduction of Rs. 14,53,19,000/- u/s 36(1)(viia), although the matter with regard to consideration of few villages within the Vasai Virar Municipal Corporation is Subjuidice with Hon. Bombay High court.
In for AY 2011-12
1. On the facts and circumstances of the case, the Ld. Comm (appeals) has rred in not allowing rural branch deduction of Rs.12,37,87,000/- u/s 36(1)(viia).” 3. At the outset, it is noticed that this issue is squarely covered by Tribunals decision in for AY 2012-13 vide order dated 19.01.2018, wherein Tribunal considering the facts and decided the issue as under: - “3. Brief facts are that the assessee is a co- operative bank and claimed deduction under section 36(1)(Viia) of the Act amounting to ₹ 18.43 crores, which was revised at 19 crore. The assessee revised its claim by increasing the deduction of rural branch i.e. Bangli Under Tarkhad Village by a sum of ₹ 0.66 crores. The AO rejected the claim only on the reason that all these villages, on which the assessee has claimed deduction under section 36(1)(viia), being rural bank branches, were put under Vasai Virar Municipal Corporation jurisdiction by the Govt. of Maharashtra vide notification No. MIS/2306/412/CR-223/2006/UD-24 dated 03-07- 2009 and according to AO all these villages ceased be rural branches and hence, assessee is not entitled for deduction under section 36(1)(viia) of the Act. Accordingly the AO disallowed claim of deduction of ₹ 18,43,05,451/- and added to the return of the assessee. Aggrieved, assessee preferred the appeal before CIT(A). Before CIT(A), assessee also claimed additional deduction in respect of Bangli Under Tarkhad Village amounting to ₹ 0.66 crores being additional branch but CIT(A) again relying on the observing as under: - “5.0
(i) I have carefully considered the submissions of the appellant, the observations of the AO in the assessment order, case laws relied upon by the appellant and the facts of the case, and therefore, I proceed to decide the appeal of the appellant.
(ii) The deduction claim of Rs.6,05,18,451/- c 7.5% u/s.36(1)(viia) has already been allowed by the AO, vide rectification order u/s 154 dated 18.06.2015. Therefore, it is not required to adjudicate on this claim of deduction
(iii) The deduction claim of Rs.12,37,87,000/- has been disallowed by the AO on the ground that the Nandakhal, Nirmal, Girz and Bhuigaon branches ceased to be Rural Branches w.e.f. 03.07.2009, as these four villages were put under the Vasai-Virar Municipal Council Jurisdiction by the Government of Maharashtra's Notification No.MIS-2306/412/CR-223/2006 /UD-24 dated 3rd July 2009, therefore, the disallowance made by the AO is sustained.
(iv) The Additional deduction claim of Rs.56.05 lakhs has been claimed during the course of the assessment proceedings, decision of the Hon'ble Supreme Court in the case of Goetze (India) Limited v. CIT (2006) 157 Taxman 1(SC),the AO disallow the additional claim of deduction.
In this regard, the additional deduction claim of Rs.56.05 lakh of the rural branch located at Bangli Branch was never included in the Vasai-Virar Municipal Corporation, therefore, the appellant is eligible for deduction, and in view of the Hon'ble Supreme Court decision in the case of National Thermal Power Corporation Limited reported in 229 ITR 383, the additional deduction claim of the appellant is allowed.
In view of the above stated facts, the claim of deduction to extent of Rs.6,05,18,451/- + Rs.56.05 lakhs is allowed but the disallowance of deduction at Rs.12,37,87,000/- made by the AO is sustained.”
Aggrieved, now assessee is in appeal before us.
4. Before us, the learned Counsel for the assessee filed a revised notification of the delimitation of Municipal Corporation of the city of Vasai-Virar, vide notification No. VVM- 2009/88/CR 244/09/UD-23 dated 05-04-2010, VVM-2009/88/CR 244/09/UD-23 dated 31-05- 2011, which are enclosed by assessee at page No. 121 to 256 and 256 to 302 respectively on assessee’s paper book. When it was pointed to the learned Counsel that these documents were not submitted before the lower authorities, he fairly conceded that this can be considered by either the AO or CIT(A). On query from the Bench, the learned CIT Departmental Representative, fairly conceded that the issue can be remitted back to the file of the AO for proper disposal of the case.
After hearing the rival contentions and going through the facts of the case, we are of the view that whether the claim of deduction by assessee under section 36(1)(viia) in regard to these rural branches, the matter need re- consideration at the level of the Assessing Officer in view of the fresh notifications filed before us, whether these villages falls in the rural or in urban area. The Assessing Officer will decide the issue after considering these notifications and providing reasonable opportunity of being heard to the assessee. Accordingly, the orders of the lower authorities are set aside and the matter is remanded back to the file of the AO for fresh adjudication. The appeal of assessee is allowed for statistical purposes.”
When this was confronted to the learned Departmental Representative, he stated that this issue can be sent back to the file of the AO on exactly identical directions.
5. In view of the above, we remand these two grounds regarding one common issue in the appeals of assessee and AO is directed to consider the directions in for AY 2012-13. Accordingly, the matter is restored back to the file of the AO in both the years.
The next issue in for AY 2011-12 is as regards to the order of CIT(A) not allowing depreciation. For this assessee has raised the following ground No. 2: -
2. On the facts and circumstances of the case, the Ld. Comm. (Appeals) has erred in not allowing depreciation claim for ₹ 11,75,610/-.”